Devon Energy Corporation

to Devon Energy's first quarter 2023 conference call. At this time, all participants are in listen-only mode. This call is being recorded. I'd now like to turn the call over to Mr. Scott Coody, Vice President of Investor Relations. Sir, you may begin.

Good morning, and thank you to everyone for joining us on the call today. Last night, we issued an earnings release and presentation that cover our results for the first quarter and our outlook for the remainder of 2023. Throughout the call today, we will make references to the earnings presentation to support prepared remarks. And these slides can be found on our website. Also joining me on the call today are Rick Moncrief, our President and CEO, Clay Gaspar, our Chief Operating Officer, Jeff Ritenour, our Chief Financial Officer, and a few other members of our senior management team. Comments today will include plans, forecasts, and estimates that are forward-looking statements under U.S. securities law. These comments are subject to assumptions, risks, and uncertainties that could cause actual results to differ materially from our forward-looking statements. Please take note of the cautionary language and risk factors provided in our SEC filings and earnings materials. With that, I'll turn the call over to Rick.

Thank you, Scott. It's a pleasure to be here this morning. We appreciate everyone taking time to join us. For today's discussion, I'll be focusing on three key topics that I believe are most important to our shareholders at this point. first quarter execution. Second, I will run through the steps we've taken to bolster the return of capital to shareholders. And third, I plan to share insights on how our business is positioned to effectively control cost and gain momentum throughout the rest of the year. So to start off, let's turn to our first quarter results on slide six, where we had several key highlights. First, total oil production exceeded our midpoint guidance at 320,000 barrels per day. representing a growth rate of 11% compared to the year-ago period. This level of oil production was the highest in our company's 52-year history. Our strong well productivity in the Delaware Basin was once again a key contributor to this result, and our recently acquired assets in the Eagleford and Williston Basin also provided us higher volumes in the quarter. Clay will touch on our well productivity in greater detail later in the call, But I do want to highlight that the average well placed online in the quarter is on track to recover more than a million barrels of oil equivalent. These strong recoveries are right in line with our historic trends over the past few years, demonstrating the quality, depth, and ability to deliver sustainable results across our resource base. Another notable achievement from the first quarter was our team's effective cost management. This was demonstrated by capital expenditures being in line with expectations and operating costs coming in better than our guidance by a few percent. I'll cover this topic in greater detail later in the call with our outlook, but this positive start to the year puts us in a great position to potentially spend fewer dollars in 2023 to achieve our capital objectives for the year. With our first quarter capital activity, We limited reinvestment rates to prudent levels, resulting in over $665 million of free cash flow. This marks the 11th quarter in a row our business has generated free cash flow, with oil prices over this time ranging from as low as $40 a barrel to as high as $120 a barrel. This is a great example of Devon's ability to generate meaningful amounts of free cash flow across a variety of market conditions. further showcasing the durability of our strategic plan to create value through the cycle and deliver returns on capital employed that compete with any sector in the S&P 500. With this free cash flow, we continue to reward shareholders through our cash return framework, which was well-balanced between dividends and stock buybacks in the most recent quarter. As shown on slide 7, the total cash payout from these shareholder-friendly initiatives reached an annualized rate of around a 12% yield in the first quarter, which significantly exceeds the available opportunities in other sectors of the market. Nearly half this payout was derived from our distinctive fixed plus variable dividend framework. This consistent formulaic approach, which began almost three years ago, has allowed Devon to offer one of the highest yields in the entire S&P 500 since its groundbreaking implementation. Now turning to slide nine, in addition to our strong dividend payout, we continued to see attractive value in repurchasing our shares, which we believe traded a significant discount to our intrinsic value. To capitalize on this compelling opportunity, we made substantial progress advancing our buyback program by repurchasing $692 million of shares year to date. In addition to our corporate buyback activity, multiple members of our management team, myself included, have also demonstrated their conviction in devolving the value proposition by purchasing stock in the open market over the past few months. With our board of directors approving the upsizing of the capacity of our repurchase program by 50% up to $3 billion, the company is well equipped to be active buyers for our stock over the course of the year. Now moving to slide 11, looking to the remainder of 2023, there is no change to our discipline operating plan we laid out for you earlier this year. Now that our Delaware infrastructure is fully operational and actively ramping to place more wells online, we expect our production to grow over the remainder of the year. This momentum places us right on track to average just over 650,000 BOE per day this year, which translates into a healthy production per share growth of approximately 9% on a year-over-year basis. With capital, We've not made any revisions to our outlook of $3.6 to $3.8 billion for the year. As a reminder, this capital forecast assumes a low single-digit inflation rate compared to our 2022 exit rate. However, in the first quarter, we did experience service price stability for the first time in many quarters, and we began to see signs of increased availability of goods and services due to an overall slowdown in industry activity. If these trends continue, we see potential for downward pressure on service costs later this year and into 2024. With much of our contract book shifting towards shorter duration agreements, we're now well positioned to work with our service partners for better terms as more frequent contract refreshment occurs over the next several quarters. Lastly, on slide 12, I believe this chart does a good job of summarizing the competitiveness of our outlook in 2023. With the plan we've laid out, we continue to possess one of the most capital efficient programs in the entire industry that is self-funded at a $40 WTI oil price. With this disciplined plan, Devon is well positioned to continue to generate significant free cash flow and execute all aspects of our cash return model, making 2023 another successful year for us. Now with that, I will now turn the call over to Clay to cover operational highlights. Clay.